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Risk and Benefits Officer
Miami-Dade County Public Schools
Miami

Behold--a Valuable Public Servant

A review of workers' compensation costs in the Miami-Dade County Public Schools caused Scott B. Clark, the district's risk and benefits officer, to take another look at unusually high weekly prescription drug costs in one particular claim.

What he discovered was a trend of flagrantly high prescription costs associated with workers' comp claims statewide due to a loophole in Florida's workers' comp law; it allows physicians to dispense repackaged medications to their patients at inflated prices.

Clark's investigation uncovered this loophole and, during Florida's 2010 legislative session, a portion of the state's workers' comp law was amended. The amendment seeks to return pharmacy costs to a reasonable and predictable level, and is expected to save Florida employers $100 million in workers' comp costs annually.

"He was the first one to really look at what was happening, and went to Tallahassee to see what should be done," said Amanda Vatter, assistant vice president of Gallagher Bassett Services Inc., the school district's third-party administrator (TPA).

School districts across the state are saving hundreds of thousands of dollars as a result, she said. "He didn't just say, 'Naughty, naughty.' He made an industry change that helped everyone in Florida."

Clark took a stand against his own pharmaceutical benefit providers that knowingly were working around the statutory pharmacy fee schedule, and profiting from it. Though technically legal, Clark felt it was unethical.

It began when Clark noticed one particular workers' comp claim in the Miami-Dade district that averaged more than $1,500 a week in prescription drugs. This led him to look at other open claims, and he uncovered a pattern of dramatically escalating drug costs beyond what was usual for the district's injured employees. Even though Florida's workers' compensation code allows injured workers to choose their own pharmacies, Clark, working with a third-party administrator, discovered that many physicians were dispensing repackaged prescriptions from their offices at excessive prices--sometimes more than 400 percent of the original price.

These medications are produced in bulk by manufacturers and repackaged for individual use by doctors' offices. Repackaging can change or eliminate the drug identification number and therefore takes it off the state-mandated fee schedule. The loophole not only cost employers millions of dollars in prescription costs but led to loss of utilization management and medication control because patients were getting medications from a variety of doctors.

"For him, the utilization piece was just as important," Vatter said. "We don't want our workers to get drugged up. These are our teachers, our bus drivers. We need a way to make sure they are not only getting their medication, but they're getting the appropriate medication."

Clark's solution was to institute a Pharmacy Validation Program, in which bills for repackaged prescriptions are revalidated to the proper fee schedules, reducing those bills to the contracted price.

The program utilizes clinical and certified coding expertise to eliminate inappropriate charges or incorrect coding on medical bills. After the standard bill review steps, the eligible bills are routed to the program staff for investigation. Depending on the services rendered on the bill, a certified procedure coder or a nurse inspects the bill, and the associated medical records and claim details to determine whether the codes and associated charges are appropriate. Inappropriate charges are recommended for reduction or denial.

Benefits to the Miami/Dade County Public Schools were immediate. During the initial three-month period in which the prescription revalidation program was launched, prescription costs decreased by $190,000.

Millions of dollars of additional savings are expected to be realized and, ultimately, improved care for the district's injured employees.

--Julie Liedman

Upholding the Traditions of Public Service

Scott B. Clark is just the kind of risk officer that every public sector entity needs. Clark doesn't just look out for the people under him, or the people who pay him, or the people who know him.

Clark's actions have benefited people "above and beyond," his immediate surroundings, and are likely to affect people long after he leaves his job in Miami.

"He didn't just say,'Naughty, naughty,'" said Amanda Vatter, assistant vice president of Gallagher Bassett Services Inc., the school district's third-party administrator. "He made an industry change that helped everyone in Florida."

Clark discovered that one claim averaged more than $1,500 per week in prescription drugs, and on further investigation, he discovered flagrantly high prescription costs associated with workers' comp claims across the state because of a loophole in the law.

Though legal, Clark felt the practice was unethical and took it upon himself to stand up against his own pharmaceutical benefit providers, and Clark's efforts have led to changes in Florida law.

CEO
Pricelock Inc.
Redwood City, Calif.

Price-Protection Insurance

The innately entrepreneurial Robert Fell was in the middle of working on a project with Andre Agassi back in the fall of 2006, helping to provide healthy foods for school kids in blue-collar areas in Los Angeles, when he stopped to fill his tank at a gas station. He overheard a debate between two plumbers over just how high gas prices could go.

"I remember it like it was yesterday," he said, and the story, like all great stories about the start of companies or landmark projects, is now part of his new firm's lore.

Back at the gas station, Fell went over and asked the gentlemen whether, if they could buy 1,000 gallons at the day's price, they would do it. Absolutely, they said. How would they pay for it? Credit card, they replied. That's when Fell, chief executive officer of Pricelock Inc., realized how emotional an issue it was.

"Much to the chagrin of my wife ... I began to do this anecdotal research," Fell recalled, kidding about how he continued to ask everyday folks about how they would mitigate the risk of fuel-price fluctuation.

Remember, this was back when the price of gas was spiking toward $4. SUVs suddenly went from being the darling vehicles on the road to being left on the side of the road. Even in 2009, with fuel costs "stabilized" around $3, fuel prices swayed back and forth 67 percent. Large, sophisticated companies like Southwest Airlines fought back against the uncertainty of fuel costs by setting up hedges. But how about small and midsize companies?

The problem "gnawed" at Fell, as problems do to entrepreneurs, and then the solution galvanized him. He contacted a powerful team of allies to make the solution a reality. First, bankers at Goldman Sachs, then investors among friends and acquaintances in the Santa Barbara, Calif., area. Leadership from the ranks of E*TRADE. And intuitively, he contacted Jay Fishman, chairman and CEO of Travelers.

Why insurance? Fell viewed the fuel-price solution--what was to become his newest company Pricelock--as "price protection insurance," a financial product that serves an insurance purpose. With Pricelock's fuel-price protection, businesses can get a payout when national average fuel prices rise above their set protection price.

"You really look at it as, this gives me predictability on my expense line," was how Fell described what Pricelock offers.

It was a fortuitous turn to reach out to Fishman at the time because, as it turns out, Travelers had been exploring a similar type of product, without avail.

"We couldn't make the numbers work," said Maria Olivo, executive vice president and treasurer with Travelers.

But Fell with Pricelock has been able to hedge and package the product, in large part because of his sophisticated team of commodities and financial experts, explained Olivo.

"You have to be able to find the right relationship ... so you're not overexposed," she said.

Olivo also pointed to Fell's innovative approach to marketing and selling the product.

In 2007, he completed deals with Chrysler and Hyundai, allowing the carmakers to offer a promotion for new car buyers to lock in fuel prices. Since the start of 2010, Fell has turned to the insurance world.

"The most exciting part of it now is really with the insurance agents," Fell said.

Travelers is exploring the option of distributing the product through its independent agents.

Fell was also able to reach out to Assurex Global, the global network of independent agents and brokers.

Jim Hackbarth, president and CEO of Assurex, said the network vets prospective partners "pretty hard."

"Let's put the dog food in front of the dogs," he said.

But when he put Pricelock in the hands of Assurex's independent brokers, it took off immediately, with 15 to 20 of the leading, most creative North American brokers jumping on the gas hedging product within four to five months of the partnership having started.

"It's a great idea, it works and their support team is second to none," Hackbarth said, adding that he's never seen anything like it.

For small to midsize clients of Assurex brokers, he said, it allows them to play a "game everyone thought only the big boys could play," protecting their assets and their income statements. For the brokers, in such a competitive climate, Pricelock is an unprecedented value-added product to offer clients.

Fell reported that Assurex agents have had 27 referrals and are now working to matriculate them into deals.

Since Pricelock's online platform went live in January, it's protected more than 100 million gallons of fuel.

--Matthew Brodsky

Fueling the Ability to Innovate and to Lead

Many of the industry's most innovative leaders, according to industry veterans, come out of the entrepreneurial ranks. Robert M. Fell fits that profile to a T.

He launched Pricelock almost by accident, after overhearing a discussion about gasoline price volatility at--where else--a gas station.

That was back a few years ago, when the price of gas was hovering around $4 a gallon.

Billed as the world's first company to offer online fuel price protection for businesses of all sizes, the purpose of Fell's company is to help small and midsize business owners by protecting them from huge swings in the price of gasoline. Fell may sound like a self-made man, but he's really a product of some of the nation's best schools, Dartmouth College and the Wharton Business School at the University of Pennsylvania.

Now he's putting that high-powered education to use in the service of small business owners, many of whom either weren't so lucky or never had the same educational opportunities but who need some price protection in their struggle to survive.

President and CEO
PureSafety
Franklin, Tenn.

Diving Deeper

To William A. Grana Jr., president and CEO of Franklin, Tenn.-based PureSafety, the reason to be in business is to empower customers through technology. Specifically, his risk management application innovations support and unite safety and health efforts enterprisewide.

PureSafety was spun off from Thompson Machinery Commerce Corp. in 1999. In his analysis of workplace safety, Grana noticed that most organizations were treating their needs for employee safety and health management in a siloed fashion, driven largely by compliance with unrelated systems addressing various program areas.

That led Grana to create a comprehensive suite of software and data-based safety and health governance, risk management, and compliance solutions. Grana's goal was to allow organizations to identify and correct potential risks before they happen. The results include reduced incidents and injuries, lower insurance costs, improved compliance, improved employee productivity and cost savings in training.

In August 2009, Grana launched the industry's first Learning and Safety Management System (LSMS), designed to integrate critical and closely related areas including training, safety and compliance. Using web-based technology, a highly intuitive user interface and an innovative platform, the system allows the company to quickly and cost-effectively add additional tools and features to meet future client needs and adapt to emerging risks.

In April, Grana followed that invention with his next breakthrough. That innovation turned out to be the next generation Occupational Health Manager (OHM) software, which unites safety and health professionals with tools to manage the entire workforce lifecycle, from initial hire and screenings, to injury prevention, corrective actions and return-to-work programs.

"Bill is a very hard working individual who is very focused on understanding the ever-changing dynamics of the markets we serve," said Dewitt C. Thompson V, chairman and CEO at Thompson, and a PureSafety board member. Thompson said Grana consistently monitors customer expectations, and at the same time, is always diving deeper into the risk details of Thompson's own operations.

Doing the right thing is particularly important to Grana because PureSafety was founded in response to a workplace fatality at Thompson--the only one in its then-54-year history.

Thompson was doing all the right things--formal safety programs, dedicated safety resources, a strong safety culture--but the accident led senior management to ask, ''How can we do more to improve safety programs and prevent another tragedy?"

The response was Grana's penchant for innovation and PureSafety's expanding suite of online safety training and risk management software solutions. Over the years, Grana has partnered with more than 1,000 organizations in more than 20 industries, giving him insight into what it takes to turn wanting to do the right thing into actually doing it.

Grana, in fact, believes that without the proper systems, tools, and organization-wide communication, "the right thing" can be hard to define, and doing it successfully can feel like a game of chance. Grana stressed that in business as in other areas of life, doing the right thing isn't always easy--but always worth the effort.

"Bill is passionate about his work, and has a strong vision of where he wants to lead the company," said Tom Gaudreau, vice president, marketing, at PureSafety.

Gaudreau also said Grana brings people together to find innovative ways to create solutions that connect safety and health as a workplace risk issue.

"They had not been connected before Bill got into solving these risk management challenges," Gaudreau said.

"He believes that the safety/health connection is to the 21st century what the quality focus was in the late 20th century. Bill believes that connection is critical to improving risk management and his innovations and client successes reflect that belief."

--Tom Starner

Born Out of Tragedy

PureSafety was founded in response to a workplace fatality at Thompson Machinery--the only one in its then-54-year history. The death happened despite Thompson following its accepted safety procedures. Yet it begged the question: How can we do more to improve safety programs and prevent another loss?

Enter William A. Grana, Jr., president and CEO, and his belief in the use of technology to serve the interests of employees. Under his leadership, PureSafety is committed to going "above and beyond" to keep employees safe, healthy, and on the job, while providing greater efficiency and cost-savings.

With a background in corporate development, law and finance, Grana has lead previous companies and his vision for PureSafety is to improve organizational performance through innovative software and information solutions that support and unite safety and health efforts.

Grana serves as a member of the board of directors for the Amyotrophic Lateral Sclerosis Association, and oversees the company's commitment to other charitable causes.

Senior Director, Loss Control and Education, Risk Management Division
Stanford University Medical Center
Palo Alto, Calif.

Digging Into the Cause of Loss Through Decision Analysis

Ed Hall, senior director, of loss control and education in the Risk Management Division at the Stanford University Medical Center, likes to focus on the "upside of risk." In doing so, he transformed the way the institution identifies risk opportunities and approaches risk management decisions and developed a way to measure return on risk management investments.

Hall developed a patented total value creation decision analysis model that demonstrates financial return on risk management investments by quantifying loss control benefits and costs. Data analysis identifies patterns and trends and focuses leadership strategy to areas where practical risk solutions can be applied.

But that is just the first step.

Believing that the future of risk management depends on the ability to recognize risks and also to quantify risk management trends and exposures, Hall developed an innovative decision analysis model. It assures that risk management initiatives create the greatest value for patients, staff and the community. It does this by allowing the Stanford University Medical Center to understand the key value drivers that increase total program value and allow it to analyze its risks strategically to make informed decisions.

The model is improving the Stanford Univeristy Medical Center's bottom-line performance and shifting the culture of how risks and uncertainty are perceived within the organization by addressing traditional risk management concerns and strategic opportunities. This process enhances company value by identifying and proactively managing risks and opportunities.

The proprietary method provides tested means of making high-quality decisions in instances of uncertainty by producing a transparent and defensible understanding of total program value and a means of identifying how to increase that value.

Central to its approach is identifying, structuring and quantifying all factors bearing on the costs and benefits of a particular decision, which leads to creation of new alternatives for increasing value.

Through Hall's leadership and use of risk-management data, the medical center was able to understand the causative factors behind medical malpractice and workers' compensation claims. The result is evidence-based information that helps understand the root causes of medical errors and employee injuries; and that leads to the creation of solutions to prevent them.

Better understanding of cause and loss drivers helps Stanford target specific control points that will reduce loss and provide a return on risk management investments. Using data to proactively target loss areas, rather than waiting to react to loss is what builds value for the organization's risk program and allows the medical center to achieve measurable and sustainable returns on its risk management investments.

The Stanford center uses the CS STARS enterprise dashboard to present information, identify trends and report results to senior leadership. The risk team then uses that information to articulate the total value of risk for any given program or intervention solution.

The result has been demonstrated reductions in overall losses related to patient and employee safety. the center has experienced a more than 75 percent reduction in claims-related costs and a more than 25 percent reduction in the frequency of workers' compensation claims. In fact, Stanford Hospital and Clinics and Lucile Packard Children's Hospital, both part of the university medical center, are the top two hospitals in California measured by decline in the frequency of workers' compensation claims.

"Ed is a man before his time," said Jeff Driver, the center's chief risk officer. "He has a fertile mind for new risk management ideas. We have enjoyed tremendous results from his total value decision analysis tools. We've been able to force out a lot of workers' compensation costs.

"I'm chief risk officer here; technically, I'm his boss. But he inspires me. He's constantly pressing towards the edge."

--Julie Liedman

Seeing the Future That is Now

Ed Hall has seen long into the future, and has recognized that it is already here.

The nation's population and workforce is aging. That means there are more patients with limited mobility admitted to hospitals, which is a crucial issue facing the healthcare industry, including elite hospitals like Stanford University Medical Center.

Patient handling encompasses all the ways in which to transport patients, and while safe patient-handling programs install machines to lift, turn and transport patients, they don't come cheap.

Hall and his team at Stanford University Medical Center, however, have reduced patient falls and the costs--lawsuits included--associated with those accidents.

"Ed is a man before his time," said Jeff Driver, the center's chief risk officer. As a result, patient satisfaction has increased, and staff injuries have gone down along with workers' compensation costs.

Hall and his team have transformed the way other institutions approach risk management. The methodology has caught the eye of the Veterans Administration and the American Nurses Association, which asked Stanford for help in designing a template for their organizations.

President
Gold Cross Safety Corp.
Boonton, N.J.

Training Program Emphasizes Do's and Shuns Don'ts

As a workers' compensation third-party administrator, Daniel P. Lanktree saw the high rates of employee deaths and brain injuries that unsafe driving inflicts.

Convinced that those incident rates, more than 40 percent of employee deaths and injuries, were excessive, Lanktree researched the psychology of human learning and developed his own driver training method.

His SMARTDRIVER training series takes a positive approach and focuses on drivers' attitudes, rather than driving skills, which Lanktree says usually are adequate.

"Safety is no accident--it's an attitude," said Lanktree, president of Gold Cross Safety Corp. of Boonton, N.J.

Hundreds of companies with thousands of employees who drive on the job have accepted Lanktree's philosophy and implemented the program. A major pharmaceutical manufacturer slashed its accident rate by more than a third, said the safety and health official who selected the program.

And this year, the program has become even more robust and holistic.

The typical driver-training program hits drivers with "a lot of don'ts," Lanktree said. "Research indicates that negativity is not an effective training tool," he said.

His research also showed that most vehicle crashes can be traced to driver error and not a lack of skill. Think of teenagers, he said. Their motor skills are keen, but they lack experience behind the wheel and generally have "a feeling of immortality."

Shunning don'ts, Gold Cross' program reinforces good behavior positively. For example, it explains what a safe driver should do after being cut off or while being tail-gated. "So, we put the white hat on our driver" in training, he said. "It's reverse psychology, but we're changing behavior in a positive, reinforcing way."

Lawrence Wylie, who selected Gold Cross' program for a pharmaceutical manufacturer's global team of 7,500 sales representatives, said no other driver training program he evaluated compared favorably.

During the half dozen years the program was in place while Wylie was corporate associate director of environmental health and safety at Wyeth, sales reps' driving behavior changed significantly, he said. The accident frequency rate for the company, acquired last year by Pfizer Inc., dropped 37 percent, and the rate of severe injuries fell commensurately, he said.

Wylie, now the director of environmental health and safety at The Scripps Research Institute, said a program intent on modifying the sales reps' behavior had to strike a delicate balance. While aggressive behavior while driving is risky, Wyeth hired those reps because of their aggressive, high-energy nature.

Gold Cross' program worked because of its positive approach, its relatable message and its presentation, Wylie said.

The program "delivered a reasonable message" by addressing risky behavior such as driving while talking on a cell phone, taking notes and texting--the sales reps' "normal behavior," he said. Because the program did not "over-sensationalize," the sales reps "could relate, and they were receptive to it."

In addition, video elements during CD or online training featured late-model vehicles and high-energy young adult drivers.

Now Lanktree is taking his program to another level by training according to individual drivers' own psychological profiles. "People learn in different ways," based on their personality type, he said.

Gold Cross also recently introduced its manager's observation program, designed to evaluate drivers on a much deeper level than just their behavior. In the program, a manager rides with a driver as an observer, not an instructor. In some cases, a manager would have been legally cleared to review the driver's personality profile before observing the driver. After the ride-along, the manager completes a form on the driver's habits and files it either with Gold Cross or the manager's own organization for evaluation.

The evaluation could diagnose issues beyond an unsafe attitude. For example, pulling up too close to another vehicle at a stop could indicate the driver needs glasses. Some erratic driving could indicate the driver is preoccupied by a family problem and would benefit from being directed to an employee assistance program.

Whether a traffic-related bodily injury or property loss can be traced to a driver's attitude, vision problem or emotional state, it all has a common denominator, Lanktree said: "Most accidents are really crashes, and most crashes are preventable."

--Dave Lenckus

Leaving a Permanent Legacy

We've all seen roadside crosses marking where drivers lost their lives. For Daniel P. Lanktree, president of Gold Cross Safety Corp., many of those accidents could have been avoided.

"Safety is no accident--it's an attitude," Lanktree said.

Lanktree said that 40 percent of workers' compensation death claims are vehicle-related crashes and more than 85 percent of crashes are the result of driver error. Convinced he could make a difference, he researched the psychology of human learning and developed his own driver training method.

The typical driver-training program hits drivers with "a lot of don'ts," Lanktree said. "Research indicates that negativity is not an effective training tool," he said.

Shunning don'ts, Gold Cross's program turns driver training on its head and reinforces good behavior positively. "It's reverse psychology, but we're changing behavior in a positive, reinforcing way."

Lanktree, a member of the U.S. Army Special Forces Association, is, after all, a doer.